November IPO Recap

In late August, after a fairly promising spring and summer, the IPO market went into its typical vacation-related swoon. After a few solid weeks in early fall, the slump has returned, and it may not be going away.

The tail-end of the summer saw four straight weeks without a single IPO coming to market, and despite a brief fall resurgence that started in late September (15 IPOs over three weeks) and powered a solid October, once Halloween hit, things got dead again. And dead they have remained.

Only two new issuers made their debuts in November, for total proceeds of $321.2M. This was a substantial decline from October’s 18 IPOs for for $4.8B. Among the two issuers, GDS Holdings Ltd put forth the largest IPO of the month, generating $192.5M in proceeds; the remaining IPO from Smart Sand, Inc. raised $128.7M. Notably, both of November’s IPOs priced below their initial filing ranges.

And yet, even with November’s meager returns, the first two months of the fourth quarter of 2016 are only a tad behind the comparable period last year, which saw 24 IPOs for $6.7B in proceeds. Not that last year was exactly gangbusters, but still.

The current 6-month IPO backlog stands at 18 issuers aiming to raise $3.2B, a sharp regression from 2015’s 63 issuers looking to collect $13.4B in proceeds at this point in the year. Looking at the total number of deals and proceeds, the Financials and Consumer Services sectors are tied for the lead in terms of deal count at four issuers each, but Financials has the edge in terms of total expected proceeds with $1.3B – compared to Consumer Services expected total of $700.0M.

This year has been one of ups and downs for the IPO market, and we’ll have the full postmortem in January. But with the holidays upon us, it’s unlikely we’ll see much of a recovery before 2017. There have been some signs of life the past few years – not in 2015, in which December saw a mere pair of IPOs land, but 2014’s record year went end to end, with 14 IPOs in the final month, and even December 2013 had 12 debuts – but as of now, we expect only three IPOs to land.

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